LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011.

Size: px

Start display at page:

Download "LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011."

Jerome Sanders
6 years ago
Views:

1 LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011. Prepared for: London Bullion Market Association (LBMA) Date: 24 February 2017 Draft Version 2

2 ASSESSMENT INFORMATION Refiner Name: Heimerle + Meule GmbH Refiner Location 1: Pforzheim, Germany, as follows: Location: Headquarters: Dennigstraße 16, Pforzheim, Germany; Warehouse: Dennigstraße 8, Pforzheim, Germany; Site: Am Muhlkanal 3, Pforzheim, Germany Location 2: Vienna, Austria Pelzgasse 18, 1150 Vienna, Austria Refiner Contact Person: Name, Title: Phone: Assessment period: Audit Type: Audit Dates: Man-days: Audit dates by location: Lead Auditor: Team Auditor: Translator: Translator: Monica Bakula Business Organization Monika.bakula@heimerlemeule.com ; Assessment Review February 13-15, 17, man-days February 2017: Dennigstraße 16, Pforzheim, Germany, and others listed above under Location 1 ; 17 February 2017: Pelzgasse 18, 1150 Vienna, Austria Stela Dimitrova Ralitsa Kondrateva Darja Polsak Maria Isabel P. Gomez ASSESSMENT CONCLUSIONS Non compliance risk level CATEGORY SUBCATEGORY Compliant Low Medium High General Information Zero Tolerance Step 1: Establish strong Refiner management systems : Step 2: Identify and assess risk in the February 2017 Page 2 of 8

3 supply chain Step 3: Design and implement a management strategy to respond to identified risks Step 4: Arrange for an independent thirdparty audit of the supply chain due diligence Step 5: Report on supply chain due diligence Based on the above assessment conclusions, the overall rating of the Refiner s performance is determined to represent: Non Compliance risk level Compliant Low Medium High Zero Tolerance Assessment scope: Refiner locations included in the assessment scope Location 1: Pforzheim, Germany, as follows: Headquarters: Dennigstraße 16, Pforzheim, Germany; Warehouse: Dennigstraße 8, Pforzheim, Germany; Site: Am Muhlkanal 3, Pforzheim, Germany Location 2: Vienna, Austria Pelzgasse 18, 1150 Vienna, Austria Assessment Period Assessment methodology: The Refiner s conformity with LBMA RGG was assessed via evidence verification and triangulation of evidences collected from various sources, and related to the existence and the implementation of appropriate systems addressing all aspects of the LBMA Responsible Gold Guidance. The sources for verification of each LBMA RGG aspect covered: documentation review, management and/or employee interviews, and observations during the facility tour. In details, these include, as follows: The following facility areas were visited during the tour: Location 1 Pforzheim, Germany: Material reception, Vault, Melting, Sampling and Evaluation, Refining, Production, Furnace department, Chemicals and Electroplating / Liquids department, Scrap storage warehouse, Investment, Accounting department, Purchasing and Sales Departments. 24 February 2017 Page 3 of 8

4 Location 2 Vienna, Austria: Materials reception and dispatch/ Trading desk, Materials Storage, Assay facility, Melting and Casting workshop, Training facility on galvanizing, Bookkeeping facility Management interviews were conducted with the following managers: Location 1 Pforzheim, Germany: Managing Director; Commercial Manager, Finance and Accounts (Senior/ Compliance Manager); Head of Analytical Chemistry, Material Science, Chemistry Production, Galvanic Production; Team Leader Materials Management Recycling (Responsible Gold Officer/ correlate LBMA Compliance Officer); Controlling Manager (Anti Money Laundering Officer); Quality Management Representative (Risk Analysis and Documents Management); Head of Production Semi Finished Products and Recycling; Business Organization (Documents Management, including Supplier/ Customer documents); Location 2 Vienna, Austria: Vienna Branch Manager, Key Account Manager Interviews were conducted with employees from the following departments: Location 1 Pforzheim, Germany: Materials reception, Refinery, Sales, Galvanizing, Accountancy (transactions check), Production Location 2 Vienna, Austria: Not applicable Interviews were conducted with all employees except for the person in charge of casting. Documentation reviewed: The documentary evidence for compliance reviewed, includes: LIS (Line Item Summary) and related documents for the sampled transactions (including intra company transfers), Business partners documentation (Supplier files), Refiner s policies, procedures and associated records covering the LBMA RGG aspects of compliance, traceability system. Remarks: (1) The assessment team conducted records review (Supplier files and Transactions per LIS) in number greater than the required maximum for Assessment Review for low risk countries, for having broader view on Refiner s Business Partners and transactions, due to the great variety and number of Business Partners type, delivery and transactions type, and Gold bearing materials. (2) The following specific regarding Suppliers applies per Refiner s internal classification: the gold supplying counterparties which deliver gold bearing material based on Purchase Order (PO) with certain pre defined amount of gold content, are classified as Suppliers, while the other gold supplying counterparties are classified as Customers. Assessment Summary: Estimated percentage for each category of the Gold supplying counterparties in the Refiner s supply chain during the assessed period. 100% second life cycle material Estimated percentage of Gold supplying counterparties for each risk category: High risk (red)- 1% Medium risk (yellow)- 35% Low risk (green)- 64% 24 February 2017 Page 4 of 8

5 Types of Gold-bearing material refined: Recycling materials (second life cycle), scrap, sweeps, residues, filters, etc. Types of products produced for commercialization: Semi-finished products in various gold, silver, platinum and palladium alloys (strips, sheets, wires, tubes, bangle blanks and ring blanks),investment products, electroplating equipment and chemicals, medical including dental products, and composite material. Main processes carried out onsite: Materials reception and storage, Refinery, Galvanizing, Production, Warehousing, Sales Have all recommendations from the previous audit by addressed: Yes Any significant or inherent limitations or areas not covered that were within the assessment scope: None Assessment criteria: All relevant objective evidences provided by the Refiner were taken into account by Assessment Team. Relevant evidence was either qualitative or quantitative, as far as it is appropriate and sufficient to support the Assessment team s conclusions. Appropriate evidence is evidence that is relevant to the assessed aspect of compliance, and is reliable. Sufficient evidence refers to the amount/ significance of evidence provided to allow the assessment team to reach a conclusion. Any actual or potential gaps in the Refiner s systems in regards to the LBMA requirements are rated in accordance to the level of risk each presents to the credibility and integrity of the LBMA Responsible Gold Program for the responsible sourcing of gold bearing materials. Assessment of compliance with the LBMA Responsible Gold Guidance: Step 1: Establish strong refiner management systems Refiner s commitment and principles related to LBMA RGG are addressed in Refiner s Policy concerning Conflict- Free Minerals and Policy regarding Due Diligence of Supply Chain of Gold. Aspects of LBMA RGG are mentioned also in Refiner s Policy regarding Laws, Human Rights, Environment and Health; as well as in Code of Conduct of Fachvereinigung Edelmetalle (German Precious Metals Federation, of which the Refiner is a member). The policies are published on Refiner s web page, respectively: The Supplier has ensured qualified and additionally trained human resources, has developed procedural and documentary resources, and access to sources for obtaining, verifying and validating information, as needed and applicable for implementation and controls of due diligence policy and procedures. The policy and the particular requirements for implementing it in Refiner s practices have been communicated to the concerned employees via their job descriptions and also during internal trainings. A RGG Handbook for 24 February 2017 Page 5 of 8

6 all employees was created, and is available to them at Refiner s intranet system The Refiner s RGG Handbook contains separate procedures in explanatory form and in the form of flowcharts, according to the type of gold bearing material and according to the gold supplying counterparty (business-tobusiness and business-to-customer supplies). Unique reference number for ensuring traceability is assigned to the gold bearing material after the receiving has been approved at the first stages of the aforementioned procedure. The induction training of all new hires covers topics on anti-money laundering and financing terrorism. Training is provided to sales representatives and employees in: Material receipt, In- house sales, Recycling, Trading and Bookkeeping departments. The topics cover: prevention of money laundering and financing of terrorism; recognition, action and reporting of suspicious activities/ circumstances, other related internal procedures. The most recent training was held on 12, 17, 21, 22 January 2017 on topics recommended at previous LBMA RGG assessment, on Risk Analysis, risk rating of shops and sales processes. The previous training of : Prevention of Money Laundering, Financing of terrorism, Know-Your-Customer, and LBMA RGG. There is internal communication process accessible to all employees for raising concerns regarding gold supply chain or any identified or suspected risk. The written procedure about it is communicated to employees. Step 2: Identify and assess risk in the supply chain Refiner s RGG Handbook contains policy and procedures for Risk Analysis and Risk Assessment of Gold supplying counterparties. The criteria are based on: LBMA requirements, WJC Rule of Law Index, SGI (Sustainable Governance Indicators), Basel s ICAR AML Index. Relevant records reflecting how these procedures have been performed are maintained. The Refiner has conducted Risk Assessment for all recycled gold during the assessment period. Mined gold was not received during the assessment period. The Refiner uses WGP, ICAR, SGI, Tax Council, VIES database (VAT online verification), Compliance Catalyst; ORBIS; BEO are the sources used by the Refiner for collecting, verifying and assessing the information for Gold supplying counterparties. Subcontractors are subject to Refiner s Risk Assessment and Risk Management process, thus including detailed subcontractor s investigation and data verification, and required acknowledgement of Refiner s Supply Chain Due Diligence Policy. Additionally, the Refiner did not receive any mined gold during the assessment period. The Refiner has Risk Assessment per country and country risk rating, classifying the countries as: High, Medium, and Low risk. Prior to doing business with counterparty from a new country, update of the risk assessment for this country is conducted. The procedure and responsibilities are defined in detail in corresponding RGG Risk Assessment and Risk Analysis procedures and job assignment. The four-eyes principle applies thus approval of two managers is required for a new high risk supply chain. Step 3: Design and implement a management strategy to respond to identified risks The Risk Mitigation strategy is carried out by the Responsible Gold Officer and AML Officer. Senior Management receives and reviews risk-related reports and decisions. In case a business partner does not cover the risk assessment requirements, there is no business relationship. 24 February 2017 Page 6 of 8

7 The existing suppliers with which the business was terminated, are put in the blacklist, and should re-apply and undergo the risk assessment process, in which the fact of their blacklisting will be taken into consideration upon defining the risk and deciding whether to restore the business relationship. Step 4: Arrange for an independent third-party audit of the supply chain due diligence The current audit represents an LBMA Assessment Review, following the Desktop Assessment of 10 June 2016 based on the Initial LBMA RGG Assessment report of 3 February Step 5: Report on supply chain due diligence The Refiner s Policy regarding Due Diligence of Supply Chain of Gold (version of 10 February 2016), and Refiner s Policy concerning Conflict- Free Minerals, are available at (respectively): _gold_english.pdf The Auditors confirm that: The information provided by the Refiner is true and accurate to the best knowledge of the Auditors preparing this report. The findings are based on verified Objective Evidence relevant to the time period for the assessment, traceable and unambiguous. The Auditors have acted in a manner deemed ethical, truthful, accurate professional, independent and objective. Lead Auditor: Stela Dimitrova Signature: [signature on file] The Auditors are properly qualified to carry out the assessment at this Refiner s facility. Date: 24 February 2017 Assessment findings, including a description of any non compliance of observation and the timeframe for the implementation of corrective actions: 24 February 2017 Page 7 of 8

8 Category Subcategory Non Compliance/Observation Timeframe for implementing the corrective action Refiner feedback Has the Refiner asked Gold supplying counterparties to commit to and acknowledge in writing compliance with the Refiner s own Gold supply chain policy? The system implemented for obtaining written acknowledgement of Refiner s Gold Supply Chain Policy from all business partners covers all new business partners, while for previously existing ones this process is ongoing and still not completed for all previous business partners. Details: The Refiner s Gold Supply Chain Policy along with request to acknowledge it was proactively communicated by Refiner to all its business partners but feedback (acknowledgement) was not collected from all previous (pre existing) business partners. 12 months This Observation mostly refers to those business partners who deal with Refiner s Sales representatives. Each Sales representative has great number of business partners to visit and collect the Refiner s Gold Supply Chain Policy acknowledgement. Parallel with this process, update of business partners database is enforced. The previous business partners are proactively approached; the status of their feedback is continuously monitored. The Refiner will continue these processes for covering all pre existing business partners which shall be finalized within 12 months as latest. 24 February 2017 Page 8 of 8

LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011.

LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011. Prepared for: London Bullion Market Association (LBMA) Date: 28 March 2016 Draft Version 1 ASSESSMENT